Technology, Prices, and the Sears Catalog

Eye-opening stuff from economist Don Boudreax at GMU. A little while ago he went through his 1975 Fall/Winter Sears catalog and compared how many hours it would take then and now for an average worker (in nominal prices) to pay for various products:

Here’s what I found:

Sears’ lowest-priced 10-inch table saw: 52.35 hours of work required in 1975; 7.34 hours of work required in 2006.

Sears’ lowest-priced gasoline-powered lawn mower: 13.14 hours of work required in 1975 (to buy a lawn-mower that cuts a 20-inch swathe); 8.56 hours of work required in 2006 (to buy a lawn-mower that cuts a 22-inch swathe. Sears no longer sells a power mower that cuts a swathe smaller than 22 inches.)

Sears Best freezer: 79 hours of work required in 1975 (to buy a freezer with 22.3 cubic feet of storage capacity); 39.77 hours of work required in 2006

Sears’ lowest-priced answering machine: 20.43 hours of work required in 1975; 1.1 hours of work required in 2006.

Sears’ lowest-priced garage-door opener: 20.1 hours of work required in 1975 (to buy a 1/4-horsepower opener); 8.57 hours of work required in 2006 (to buy a 1/2-horsepower opener; Sears no longer
sells garage-door openers with less than ½-horsepower.)

Sears’ highest-priced work boots: 11.49 hours of work required in 1975; 8.26 hours of work required in 2006.

Sears Best automobile tire (with specs 165/13, and a treadlife warranty of 40,000 miles: 8.37 hours of work required in 1975; 2.92 hours of work required in 2006

As a related aside, most of those products will last considerably longer today, and the powered ones almost certainly use a fraction of the power of their 30-year-old counterparts.

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Comments

  1. how about tech? Price of chips and hardware in general would look good. LD calls would look good, but not T1 lines. Oracle maintenance and Accenture and IBM rates would look nasty. I had a post a few months ago What if Intel was a services vendor?

  2. Franklin Stubbs says:

    So as durability approaches infinity and profit margins asymptote above zero, what happens to all the workers who used to make the stuff?

  3. Franklin – you’re kidding, right? They’re making other stuff, consulting to their old companies (making more than before), retired in their brand new pad in Vegas. They’re certainly not unemployed.

  4. Franklin Stubbs says:

    I’m not complaining–I am a firm supporter of free trade, technology, and globalization–but nor was I exactly kidding.
    Manufacturing is heading down the same path as farming in the last century–good for everyone except the inefficient farmers who don’t have a Vegas pad and can’t swing a consulting job. The game is being turned upside down, and advances in technology are playing a significant role in that. Our societal models will be turned upside down with it.

  5. angryinch says:

    Agreed, “stuff” is often cheaper these days. But when I look at my monthly budget, the “stuff” you mention barely registers. Here’s my biggest expenses and the pct of my spending they represent: housing 35%, healthcare 6%, food/entertainment 8%, education 10%, car/ins/gas 9%, travel 8%, utilities/phone/etc 6%.
    The “stuff” you mention doesn’t even warrant a category in my budget, it gets thrown in with miscellaneous at about 5%. So even if this “stuff” were 50% cheaper, it represents 2.5% of what I spend.
    On the other hand, everything else (housing, food, healthcare, education, utilities, energy, etc) is skyrocketing in cost.
    So how much better off am I because a lawn mower is cheaper and more efficient than it was 30 years ago?
    Speaking of 30 years ago, I bought my first home in Calif for $70,000. Today it’s apparently worth $1.35 million—a 19-fold increase in cost. Yet median incomes in Calif have only risen about 5-fold since 1976.
    For folks with assets (like stocks, real estate), these are boom times. For the vast majority, with only a single residence or a small 401k (or nothing), a cheap lawnmower ain’t gonna cut it.
    Everything people MUST have is skyrocketing—local taxes, nickel-and-dime fees, education, health, energy, housing, food, you name it.
    Take bridge tolls. I pay bridge toll of $5 every day. That’s about $1,200 a year. 15 years ago, I was paying $1 a day. And they’re just about to raise it again.
    This whole notion of hedonics may make sense to an economist, but it completely misses the big picture: 1% of Americans are living large, 10% are doing pretty well, the bottom 25% are scrapping along as always, but for the yawning 65% in between, things are getting tougher and tougher. They are getting by via debt and delayed payment, simple as that.
    Over the next 5-10 years, all of this will come to a head. And it won’t be pretty. Unless you assume that the rest of the world will continue to provide us with unlimited supplies of low-interest debt ad infinitum.

  6. This is a terrifically disengenous argument that gets trotted out every few years.
    Why disengenous?
    At least two issues are raised: First, any “temporal” argument about price, living standards , etc. is two sided: Consider how expensive everything we purchase today — Plasma screens, iPods, PCs, Routers, Hard drives, Cell phones, Blackberries, the chips and airbags in your car, etc. — will look 30 years from now.
    The 2nd issue is that Wealth is Relative: While our standard of living versus the King of England in 1643 is higher, his standard of living was higher than everyone elses at the time.
    Its a subtler difference with the 1975 stuff — All these Sears items — so commonplace as to be ubiquitous today — were the trappings of the upper middle class and better back then. Garage door openers, seperate freezers, answering machines in 75? We may laugh now, but they were the symbols of suburban wealth.
    Do the same analysis with a Mercedes Benz S class — or is the modern equivalent a Maybach? — then get back to me . . .

  7. Barry — I don’t disagree that this argument can be used in disingenuous fashion, but my target was more those folks who so arbitrarily dismiss hedonic adjustments to products for CPI. Products do improve materially, and there is value in, even for comparative purposes, pricing those improvements into inflation/price indices.